(MENAFN- Gulf Times) Nissan Motor Co Ltd has nudged up its profit forecast for what is already set to be the automaker's best year since 2008, saying a surge in the dollar is pushing up the value of earnings in the US, its biggest market.
Japan's No 2 automaker by sales after Toyota Motor Corp has enjoyed strong growth in the US over recent quarters, achieved partly by offering buying incentives well above the industry's 2014 average of $2,784 per vehicle.
In the third quarter alone, when Nissan's earnings eclipsed analyst estimates, discounts cost the automaker around $3,500 per vehicle, according to researcher Autodata. But the strength of dollar sales in yen terms drove up income, helping Nissan offset weaker-than-expected demand in China and Russia.
"We anticipate good full-year results as our product offensive and positive momentum in North America ... offsets volatility in other markets," chief executive officer Carlos Ghosn said in a statement yesterday.
Nissan raised its operating profit forecast by 6.5% to ¥570bn ($4.79bn) for the business year ending March 31. That compared with the ¥589.9bn average estimate of 29 analysts polled by Thomson Reuters I/B/E/S.
It also changed its US dollar exchange rate assumption to ¥108.8 for the year from ¥104. Currency movement accounted for ¥55bn of the revised profit forecast, corporate vice president Joji Tagawa said at an earnings briefing.
At the same time, Nissan lowered its global sales projection by 2.8% to 5.3mn vehicles, primarily because of overall market conditions in China and Russia.
For October-December, profit nearly doubled to ¥156.0bn versus the ¥121.42bn estimate of 12 analysts, helped by a low base of comparison from the year-earlier quarter when Nissan booked higher marketing expenses.
Nissan also reported an operating profit margin of 5.3% for the quarter. That was half of Toyota's 10.6%, and was even lower than the 5.4% of Honda Motor Co, which is grappling multimillion-vehicle recalls for air bag problems.
"Our profitability in the US still lags," Tagawa said. "We'll aim to improve this by controlling costs and incentives more, as well as improving product pricing."
Nissan's near-term priority is to achieve a margin of 8% by the year ending March 2017 according to its in-house calculation. Under that standard, Nissan has reached a margin of 5.9% so far this business year.
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